Database Gives Consumers More Transparency on Healthcare Costs

The task of tracking out-of-network costs for different medical procedures and tests has brought on many a headache. But a new database, called the Consumer Cost Lookup, aims to help.

The database, unveiled earlier this month, stems from the 2009 investigation by New York Gov. Andrew Cuomo -- then the state attorney general -- into the insurance industry's suspicious billing practices for out-of-network payments. His investigation led to a settlement of more than $95 million with UnitedHealth Group (UNH) and the insurance industry, as well as an agreement to set up a new system for calculating costs.

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Fair Health, a nonprofit agency created after the investigation, acts as an impartial overseer for the cost-of-care database, says Robin Gelburd, president of Fair Health. The database provides an alternative to Medicare data, which has some shortcomings, she adds. The Consumer Cost Lookup website offers clear and easy-to-understand information to help demystify the insurance claim process. An independent advisory board helps monitor the database, which was assembled with oversight from research universities.

"We hope it does establish constructive dialogues between patient and doctors, and consumers and insurance companies," Gelburd said in a phone interview. "Both plans and providers both seem to understand that transparency is coming down the pike and we are seeing people embrace our agnosticism."

Cuomo claimed that insurance companies had engaged in a "scheme to defraud consumers" by systematically underpaying healthcare patients' costs for out-of-network bills. Insurance companies didn't admit to any wrongdoing, but agreed to pay nearly $100 million to settle the case. UnitedHealth Group also paid insurance holders $350 million in a class-action settlement.

In the new Consumer Cost Lookup, patients can search for procedure codes and local cost of care using their zip codes. For example, it estimates that a person in Houston can expect to see a bill of $1,204.51 for gallbladder removal after being reimbursed $2,810.51 -- or 70% -- out of a total charge of $4,015.02.

The data has been pooled from the experiences of more than 110 million health-insurance customers. Additional information on multiple-procedure scenarios (e.g., a knee-replacement surgery) is coming soon, Gelburd says.

Still Missing: Quality Comparisons

As a consumer tool, the database comes at a time when more healthcare consumers are moving to high deductible plans and accrue more out-of-network bills. The American Medical Association's report card on the insurance industry, released last June, concluded that one in five claims is misprocessed as a result of code inaccuracy and other issues. The new Consumer Cost Lookup database adds another layer of autonomy for patients, who now can easily access the procedural codes and costs.

Yet costs are only one piece of the insurance scenario, says Frank Lichtenberg, a health economist at Columbia Business School. The new database is useful in exposing cost, but doesn't address quality, which a key factor for patients deciding whether to go out of network or not, he notes. Quality has been more difficult to track over time because doctors, knowing they are being evaluated, may not treat sicker patients in order to boost their own ratings. Yet when patients get referrals -- either through a primary care doctor or a friend -- they often decide based on the quality of care, not cost.

"Suppose that I think I will get better quality care or a relationship with an out-of-network provider. It will cost me more, but I think I will get better quality," he said. "That is worth something, but how much is it worth? ...Consumers still have to make that decision based on relative quality and their value on the relationship [with the provider]."